The word Forex is a combination of two simpler words Foreign Exchange . The simple meaning of Forex Trading is exchange of foreign currencies. Foreign exchange, commonly known as ‘Forex’ or ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. Forex is the world’s most traded market, with an average turnover in excess of US$5.3 trillion per day by Forex Brokers. Below is more information about what is Forex Trading for dummies.

Broker Min Account Size Leverage Spread US Traders Review Open Account
Fxstay $1000 1:500 EUR/USD: 0.6 Review Free Account Demo

What Is Forex Trading

Forex Market is where currencies are traded to make profit. Fx Trading market is like any other market where goods are traded. The only difference between the Fx Trading market and any other market is that goods are bought and sold in other markets whereas currencies are bought and sold in the Fx Trading Market . For example, you can buy euro by paying AUD (Australian Dollars) or you can buy JPY (Japanese Yen) by paying US dollars. Currencies are treated like goods in the Fx Trading market.

Forex Market Hours

Forex is global in nature because traders from all around the world can place trades to earn profit. Participants in Fx Trading market are more than any other market in the world and this makes Fx Trading market, the biggest market of the world. More than a trillion USD trading is done everyday in this market. Forex Trading is done in the first five days of the week starting from Monday and do not stop for a second till the end of Friday. It means Fx Trading is done 24 hours in all five days. The Best Forex players in Fx Trading market are large banks, large international corporations and financial institutions.

Currency Trading Leverage

Foreign exchange is a leveraged product, which means that you are only required to deposit a small percentage of the full value of your position to place a Forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading. Find out more about risk management.

Foreign Exchange Pricing

All FX is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘counter’ currency. The base currency is the currency on the left of the currency pair and the counter currency is on the right.

For example, in EUR/USD, EUR is the ‘base’ currency and USD the ‘counter’ currency. Forex price movements are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening). If the price of EUR/USD for example was to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (Euros) was depreciating.

When trading Forex prices, you would buy a currency pair if you believed that the base currency will strengthen against the counter currency. Alternatively, you would sell a currency pair if you believed that the base currency will weaken in value against the counter currency. Some examples of major currency pairs are:

EUR/USD (The value of 1 EUR expressed in US dollars)
USD/CHF (The value of 1 USD expressed in Swiss francs)

FX Trading Pips

Pip stands for Percentage in Points. Most of our currency pairs are quoted to 5 decimal places with the change from the 4th decimal place (0.0001) in price commonly referred to as a ‘pip’. For example, if the price of the EUR/USD Forex pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 ‘pips’ (92-80=12).
Spread

The difference in the BID/ASK of the currency pairs is referred to as the ‘spread’. An example would be EUR/USD dealing at 1.33800/1.33808 (in this case the spread is 0.8 pips or 0.00008). The exceptions to this are the JPY pairs which are quoted to just 2 decimal places. A USD/JPY price of 97.41/97.44 displays a 3 pip ‘spread’.

What affects Foreign exchange prices?

Forex prices are influenced by a multitude of different factors, from international trade or investment flows to economic or political conditions. This is what makes trading Forex so interesting and exciting. High market liquidity means that prices can change rapidly in response to news and short-term events, creating multiple trading opportunities for retail Forex traders.

How To Trade Forex

To Trade foreign exchange currencies you need to download an online trading platform and to download a trading platform free you need to sign up with a Forex broker and download FX trading platform then open a demo Forex account free and start Forex Trading, You can check homepage of TopForexBrokers.com for open free demo currency trading account.

Broker Min Account Size Leverage Spread US Traders Review Open Account
Fxstay $1000 1:500 EUR/USD: 0.6 Review Free Account Demo

Make Money Even You Don’t Know Online Currency Trading

Managed Forex accounts is the best solution if you don’t know have time to trade currencies or even you don’t know Fx trading at all, Professional experienced money managers and best Forex traders will trade for you and split the profit at the end of the year or each month.
Some of trusty Forex managed accounts companies like Fxstay team make several million dollars profit for their clients in a fiscal year so if you don’t know Forex trading or don’t have time to trade and manged your Fx account so open a managed Forex account and use top money managers to managed your Forex account.

Know More About What Is Forex Trading

Broker Min Account Size Leverage Spread US Traders Review Open Account
Fxstay $1000 1:500 EUR/USD: 0.6 Review Free Account Demo